Australian fast-food operator Collins Foods Ltd (ASX: CKF) announced on Tuesday that it plans to exit its Taco Bell business within a year and shift its focus to expanding KFC outlets in Germany.
This decision is part of a broader strategic overhaul as Collins navigates slower consumer spending in Australia. Despite the move, the company emphasized that Australia remains a “highly profitable growth market” and will continue to operate under its development agreement with KFC’s parent company, Yum! Brands Inc (NYSE: YUM).
Collins revealed it had entered an agreement with Yum to open new KFC outlets in Germany, where it currently operates a small portion of the 207 KFC locations. The company sees Germany as a key market for growth and is positioning it as a second strategic growth pillar. In addition to expanding its KFC presence, Collins is exploring potential mergers to further boost its footprint in the country.
However, in the Netherlands, Collins flagged a potential impairment of between $25.5 million and $32.7 million due to challenges from high inflation and limited expansion opportunities. The company is reviewing its Dutch operations, with a potential overhaul on the horizon.
Following the announcement, Collins Foods’ shares dropped 1.4%, underperforming the ASX 200, which rose by 0.2%.
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